Chipmakers join forces to conquer car market

Chipmakers join forces to conquer car market

Qualcomm announced Thursday its $39 billion acquisition of NXP Semiconductors, the biggest in the history of the semiconductor industry to date.

The deal will help Qualcomm expand its reach into the auto industry, where NXP has a strong foothold, as the smartphone market it dominates dwindles.

Industry data show that the average new car has 616 chips installed compared with 550 in 2013, while their value has increased to $350 per vehicle this year from $250 in 2000.

Gartner analyst Jim Hines said that Qualcomm’s bid for the car market could gain traction with the NXP deal.

The drive towards autonomous vehicle control is propelling consolidation among chipmakers as new cars require more powerful chips and software to analyze data from cameras, radars and a myriad other sensors .

However, the emerging car computing market is not the only jewel in the NXP crown that will benefit Qualcomm, its chief executive Steve Mollenkopf told reporters. The company has a 25,000 strong client base that procures a cornucopia of products. It also has a wide distribution network that could push Qualcomm’s technology to a broader audience.

Another emerging trend that is expected to get a hand up from the deal is the increasing adoption of the Internet of Things (IoT). IoT is a concept in which products, such as household appliances, and other devices are installed with sensors, computing and communications capabilities to connect to a network that can detect and control them.

“There is going to be a huge change in the technology that goes into autos and the IoT,” Mollenkopf concluded.